Accounting Equation Problems MCQs 1

Which of the following will not change the total assets?

Owner’s cash investment

Paying cash to buy equipment

Taking a bank loan

Receiving cash from customers

Correct! Wrong!

If assets are $50,000 and liabilities are $20,000, equity equals?

$30,000

$20,000

$50,000

$70,000

Correct! Wrong!

Paying cash to settle a supplier’s account will?

Decrease assets and decrease liabilities

Decrease liabilities and increase equity

Increase assets and increase liabilities

Increase assets and decrease equity

Correct! Wrong!

Which transaction increases both assets and owner’s equity?

Purchase of furniture for cash

Paying rent

Payment of salaries

Cash sales to customers

Correct! Wrong!

Which transaction decreases assets and decreases equity?

Selling goods for cash

Paying office rent

Borrowing from a bank

Owner invests cash

Correct! Wrong!

Which of the following best represents the basic accounting equation?

Assets = Revenue + Expenses

Assets = Liabilities + Owner’s Equity

Assets = Liabilities – Owner’s Equity

Liabilities = Assets + Equity

Correct! Wrong!

If a business buys equipment on credit, the accounting equation will?

Increase assets and increase liabilities

Increase liabilities and decrease equity

Only affect expenses

Decrease assets and increase equity

Correct! Wrong!

Which will decrease assets and liabilities simultaneously?

Earning revenue

Paying off a bank loan

Buying inventory on credit

Receiving payment from debtors

Correct! Wrong!

Revenue earned in cash affects?

Assets decrease, equity increases

Liabilities increase, assets decrease

Assets decrease, liabilities decrease

Assets increase, equity increases

Correct! Wrong!

When a company borrows cash from a bank?

Assets increase and liabilities increase

Assets increase and equity increases

Liabilities decrease and equity increases

Assets decrease and liabilities increase

Correct! Wrong!

Accounting Equation Problems MCQs 1

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Accounting Equation Problems MCQs 1

Which of the following will not change the total assets?

If assets are $50,000 and liabilities are $20,000, equity equals?

Paying cash to settle a supplier’s account will?

Which transaction increases both assets and owner’s equity?

Which transaction decreases assets and decreases equity?

Which of the following best represents the basic accounting equation?

If a business buys equipment on credit, the accounting equation will?

Which will decrease assets and liabilities simultaneously?

Revenue earned in cash affects?

When a company borrows cash from a bank?

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